What Is Legal Incorporation?

It is the strict process that has to be undergone in order for one to officially and legally form a corporation or a company. Whatever agreements that were made must be followed or else the individuals responsible for the formation of the legal entity will face serious consequences. It is one of the best ways of securing a startup as it guarantees that the right laws are followed in order to do business.

How to Make a Legal Incorporation Document

1. Start By Pointing Out the Type of Legal Entity Being Applied For

Know that each type of legal entity will always have its advantages and disadvantages so it's best to learn what they are before the creation process. As for the types that you can go for, there are at least six: sole proprietorship, partnership, limited partnership, corporation, limited liability company and other business entities (LLP, LLPA, PA, etc). Be absolutely sure to choose the one that's the most beneficial to you before deciding and putting it into the writing.

2. Provide the Basic Information

Start by specifying the date in which the agreement took effect. Proceed with writing down the complete name of the legal entity as well as that of the individual or partners involved in its creation. You must then specify the area which carries the laws that must be followed. Lastly, be sure to put in the complete address of the legal entity's head office.

3. Write Down the General Terms and Conditions

Begin with stating the type of business to be done by the legal entity. If there is a partner involved, then this section of the document must discuss the agreements and obligations that both have with one another. This would include the amount of capital the both must provide and how net income and net loss will be allocated. For those who are going for a sole proprietorship, this section must contain statements regarding how you will be obliged to operate under the law and other details concerning finances, operations, rights and privileges, etc.

4. Include Any Miscellaneous Agreements

This is where you include any additional agreements that you may need in order to protect your legal entity. This would include ones involving the confidentiality of important business information, how disputes between parties involved are to be settled, the rights of asset distribution to anyone without the dissolution of the business and much more. Decide on what you think you may need to add before putting it into the document.

5. Provide a Space for Signatures

Lastly, the document must contain spaces where it can be signed by the individual or partners who wish to create the legal entity and a representative of the law that can provide the approval. Make sure that their complete names, job titles, and signatures are all placed into the document. Also, provide a space where one can put in the exact date in which the document was signed as this information may be needed to address future concerns.

Read More